The Genesis of a Crypto Revolution: How a Hong Kong Hike Redefined Trading

In 2015, during a hike in Hong Kong, the concept of the perpetual swap, also known as a perpetual future or 'perp,' was conceived. Ben Delo, BitMEX's co-founder and a mathematician, was on a hike with Bavik, a derivatives trader, grappling with a problem that had been bothering him for months. BitMEX had experimented with various futures contracts - quarterly, monthly, weekly, 48-hour, and even 24-hour contracts. However, customers continued to complain about their positions being closed without warning, seeking a product that resembled spot trading but offered the leverage of a derivatives exchange. Delo asked, 'What if a future never expired?' Bavik's immediate response was that it would be worth infinity from a mathematical standpoint, as the value of a futures contract is partly derived from the time remaining until expiry and the cost of carrying the position. Removing the expiry date would make the carrying cost compound indefinitely, theoretically making the value infinite. Bavik suggested charging traders the bitcoin overnight rate to solve this issue. Delo then built this concept, inventing one of the most significant financial products of the 21st century. The story of BitMEX's evolution and the creation of the perpetual swap is one of innovation and adaptation, driven by the needs of its customers and the vision of its founders.